April 30, 2009

Joel Spolsky founded Fog Creek Software with Michael Pryor in 2000. They did not have a specific product in mind, but wanted to start a company where they (and other top computer science talent) would want to work. Joel’s blog, Joel on Software, helped get his startup off the ground. He created a very popular blog among software developers around the world. Fog Creek is based out of New York City and writes software for bug tracking and remote desktop. Fog Creek has doubled its sales every year (even during the dotcom crash) and have never taken outside investment.

I find it very notable that Fog Creek has never taken outside investment. One of the reasons for this is that they did not want an outside venture capitalist to pull the company in any direction. This demonstrates organic growth – they did not grow too quickly, and that is why they are sustainable. The interview in Founders at Work describes the growth process as a more traditional business rather than a fast web startup. This makes sense because Fog Creek was formed as an anti-dotcom company. Spolsky saw that most internet startups were overvalued and their founders were inexperienced.

Joel describes Fog Creek working as a software consulting company as a means to an end. Fog Creek was doing consulting work while building a software company internally. Fog Creek (and most other consulting companies) paid their consultants $60 an hour and charged them out at $250 an hour. This worked great until the market disappeared for highly paid consultants, so Fog Creek became a traditional software company (like they had planned).

The story behind fog creek is really interesting. It fits with the “made by programmers, for programmers” because their employees are highly paid and have some of the best amenities in the industry (Below picture is the office - from this album).